Analysis and criticism of America's most prominent public intellectual and champion of Keynesian economics. I am part of the Austrian School of Economics, and I critique Krugman's writings from that perspective.

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Thursday, August 25, 2011

Space aliens and coal mines: yeah, it all makes sense, now!

When I taught a macro course 20 years ago at UT-Chattanooga, we used Wallace Peterson's book which quoted Keynes as though it were Holy Scripture. Not surprisingly, Paul Krugman now seeks to justify his "space aliens" nonsense with...a quote from (Who else?) Keynes.

I will let readers view his post, but keep in mind that Krugman also thinks that he has effectively demolished the idea of gold being legitimate money. (According to Krugman, gold is a "useless metal," which I suspect is his way of saying that people use scarce resources to dig up something "useless," which, I guess, means that they are idiots.)

Furthermore, the use of gold bars in the "basements of central banks" is a relatively recent phenomenon and has little to do with the historical role of gold being used as a medium of exchange as opposed to a basis for issuing paper. But, given what I have read of Krugman, he would take it that we should leave gold in the ground (except for jewelry) because paper is being managed by Really Smart and Serious People like Ben Bernanke.

Paul Krugman has become a cultural icon by promoting views that have been discounted by serious research economists. However, he knows the terrain well, is glib with the pen, and provides insults that liberals eat up.

My hypothesis: Fame and fortune are fanning PK's talking points. I think he sells a lot of papers for the NYT.

1. Every time Kroogie is right, we make note of it. He's often right about MMT. While Kroogie claims we need money dilution and debt in bad times, MMTers say we need it all the time. Without deficits, the private sector cannot net save! (Which is self-evident, right?).

Kroogie senses that people might hear the MMTers and think all Keynesians are completely wacky all of the time, so he must take them down.

http://krugman.blogs.nytimes.com/2011/08/15/mmt-again/

2. Of course, Kroogie notes in that blog post that the Austrians are having a “real - and really bad influence” lately on monetary policy.* I would think that would be a good reason and a good time for Keynesians to finally actually learn some of the basic Austrian concepts. Is it really “scientific” in the “progressive” world to attack one’s intellectual opponents without understanding the slightest thing about their ideas? Also, shouldn’t that make Austrian Economics a hot topic on TV news, if only in a real - and really bad way?

3. Isn’t the internet great? I love it. It makes it so easy to quickly demonstrate that Keynesians are such pathetic, hapless emotionally crippled dolts who live in an alternative reality.

*Kroogie shares my view that the MMTers do not and will not have such an influence - their explicitness allows average people to quickly and painlessly see them for the nuts that they are.

2. No real comprehension of the necessity and nature of the SWAT teams that must be called in to execute his "plans";

3. Complete naivete on the nature of unconstrained government and majority rule;

4. A thick-headed vision of an a priori mechanical world. Free markets mechanically ALWAYS must fail. Government programs to fix these alleged failures always work mechanically. People who are a priori too dumb to fix the problems of the voluntary sector are smart enough to select their overseers to run a SWAT team sector. People who are too dumb to figure out how risky their loans really are are smart enough to select overseers of such risks who rule with SWAT teams.

5. Why do we have the burden of proof to show freedom works? Why don't the statists have the burden of proof to show that it allegedly doesn't work and that their SWAT team solutions do work?

About Me

I teach economics at Frostburg State University in Frostburg, Maryland. We are located on the Allegheny Plateau, and we have cool summers and tough winters.
I am the father of five children, four of them adopted from overseas, and the husband of a beautiful wife. I have two grandchildren. My family and I are members of Faith Presbyterian Church (PCA).